Kaye Scholer Secures Major Victory on Behalf of the City of Los Angeles in Case of First Impression

April 15, 2009

In a victory for our client, the City of Los Angeles, Judge Richard A. Leon of the United States District Court for the District of Columbia rejected efforts by the Federal Maritime Commission ("FMC") to preliminarily enjoin aspects of the Clean Trucks Programs ("CTPs") of the Port of Los Angeles and the Port of Long Beach.

The CTPs were developed by the adjoining ports of Los Angeles and Long Beach (the two largest ports in the United States) to reduce harmful emissions generated by drayage trucking activities at the ports and to safeguard the ports against safety and security threats in an age of terrorism.

In his April 15 decision, Judge Leon found that the FMC was not likely to succeed on the merits of its claim, which was brought under the Shipping Act of 1984. The FMC alleged that an agreement filed by the Ports with the FMC authorizing the Ports to discuss and reach agreement concerning certain aspects of their CTPs violated section 6(g) of the Shipping Act. That provision authorizes the FMC to seek injunctive relief if it determines that an agreement filed with it is "likely, by a reduction in competition, to produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost."

As Judge Leon noted, in the 24 years since the Shipping Act's enactment, this case represented the first time that the FMC had ever invoked section 6(g).

Judge Leon agreed with the Ports' arguments that the FMC's inconsistent positions regarding the relevant market in which competition was supposedly likely to be reduced, and its failure to establish a link between the alleged reduction in competition and the alleged likely reductions in transportation service or increases in transportation cost were fatal to its request for a preliminary injunction. As Judge Leon explained, "Here, the record lacks any direct evidence that the differences between the Ports' CTPs are anything but the result of divergent policy views as to the most effective way to structure their respective CTPs, which require careful balancing of environmental, technical, fiscal, and commercial considerations."

In response to the decision, the Port of Los Angeles and the office of Mayor Antonio Villaraigosa issued a press release in which Mayor Villaraigosa stated: "This is a clear victory for our Clean Truck Program and the idea that you can both green and grow the Port of Los Angeles at the same time." Geraldine Knatz, Executive Director of the Port of Los Angeles further noted: "We have already removed thousands of polluting port trucks from service and today's victory helps clear the path for more progress."

Litigation Partner Steve Rosenthal led the Kaye Scholer team, with assistance from Alan Palmer (Special Counsel), Tiffany Moseley (Associate), and Susanna Chu (Associate), all of Kaye Scholer's Washington, DC office.

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